With its liquids-rich offerings, the Eagle Ford Shale holds on to its powerhouse status. According to recent estimates by the Texas Railroad Commission, the South Texas black-gold mine is expected to pump 802,734 barrels a day in 2014. In fact, in a mid-June forecast, energy consultancy Wood Mackenzie estimated crude and condensate output from the formation is set to double through 2020 to two million barrels per day.
With stats this promising, energy companies of all facets continue to deal in the play. In one of the largest deals of the spring, Encana acquired Eagle Ford assets from Freeport-McMoRan Copper & Gold for $3.1 billion. Spurred by its strategy to reduce the company's dependence on natural gas and refocus on fields with reserves high in oil and natural gas liquids, the deal includes assets in Karnes, Wilson, and Atascosa counties with an estimated drilling inventory of more than 400 locations. The 45,500 net acres hold estimated net proved reserves totaling 59 million barrels of oil equivalents (boe) and estimated net proved and probable reserves of 69 MMboe at year-end 2013. Production from the field averaged 53,000 boe/d in the first quarter of 2014.
Like Encana, Devon Energy has made strides padding the oily portion of its portfolio, thanks, in large part, to the Eagle Ford.
Early in the year, Devon Energy made a significant step forward in the execution its non-core divestiture process, selling conventional Canadian assets for C$3.125 billion to help fund last year's purchase of Eagle Ford assets from GeoSouthern in a deal that, as Canaccord Genuity analyst Robert Christensen noted after the announcement, tied in well with the Oklahoma City-based company's Barnett shale experience and could help grow production 31% in 2014 and 23% in 2015.
San Antonio-based Abraxas Petroleum Corp., the second-fastest growing company in 4Q13 according to the OGJ150, is deploying capital from last year's WyCross sale to help accelerate 2014 activity in the Eagle Ford. Since the start of the year, the company has added $65 million to the company's 2014 capital budget for a total of $190 million. The increase will help maintain a one rig program in the play for the rest of 2014, as well as keep the door open for additional Eagle Ford acreage acquisitions. The current plan includes drilling the remaining two wells on the company's Cave prospect, drilling one additional well on the company's Dilworth East prospect and drilling three additional wells on the company's Jourdanton prospect.
In an effort to ease some of the transportation issues in the region, companies in the midstream sector are continuing to move in the area, as well.
In mid-June, Southcross Energy LLC, owner of the general partner of Southcross Energy Partners LP, agreed to combine with TexStar Midstream Services LP, a gas gathering and processing partnership in the Eagle Ford. The transaction includes four processing plants, three fractionation facilities, and 3,700 miles of pipeline.
After the transaction closes, a newly formed company, Southcross Holdings LP, will own 100% of the general partner of Southcross and equity interests in Southcross, as well as former TexStar assets. EIG Global Energy Partners, Charlesbank Capital Partners and Tailwater Capital will each indirectly own approximately one-third of Southcross Holdings.
Simultaneously with closing, Southcross will acquire roughly one-third of TexStar's midstream assets for $450 million, consisting of $180 million in cash and 14.633 million newly issued payment-in-kind Southcross common units.
As a state, Texas has seen a jump in active rigs—up 49 from a year ago, according to oilfield services provider Baker Hughes. That same data suggests that in late May, drilling rigs in the Eagle Ford hovered around 213—down 19 rigs from a year ago. But, while the number of rigs is sometimes used to gauge production levels, experts and recent federal data point to more efficient drilling practices in the play as reason for the decline.
Mikaila Adams | Managing Editor - News
Mikaila Adams has 20 years of experience as an editor, most of which has been centered on the oil and gas industry. She enjoyed 12 years focused on the business/finance side of the industry as an editor for Oil & Gas Journal's sister publication, Oil & Gas Financial Journal (OGFJ). After OGFJ ceased publication in 2017, she joined Oil & Gas Journal and was named Managing Editor - News in 2019. She holds a degree from Texas Tech University.
